Christmas 2016 in focus - Lidl
19 December 2016
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All change at Lidl of course with a new broom sweeping clean it seems, of course their Christmas plan will have been locked and loaded some time ago now.
Therefore the focus on Deluxe range and the advertising package isn't necessarily where the business may see itself in 2017, but for 2016, this is where they are.
They're in a good place in fairness with regard to their offer and have a wide range of products once again. They've hit that sweet spot at Christmas with a focus on premium and not overloading the store with it all year round.
Deluxe is generally given a lot of attention in store around peak seasons like Christmas and Easter. Their ranges are expanded in categories like Frozen and Chilled and the ambient seasonal space also has premium lines added to the assortment too.
Therefore the Kantar growth in premium story is valid but a little obvious perhaps. As noted, premium ranges grow significantly at Christmas both in number but also exposure in store.
Seasonal level of growth is huge in Lidl, less so in Aldi (they're more all year round) but still they do expand ranges within premium to attract the trade up shopper, growing spend but trying ensure that customers don't then disappear to a larger retailer to complete their shop.
The Frozen category benefits from a good range expansion in premium, the Deluxe range features numerous larger Meat joints, accompaniments and desserts.
The step up in range is notable with the various frozen deluxe lines merchandised together to bring the assortment together.
Note the more 'exotic' foods too - Quails and Ostrich steaks for example.
Provenance continues apace at Lidl, they're brilliantly good at marketing and linking together their signage package in store with their wider advertising package.
The tone of voice is reassuring and there's always a story to be told - harvesting Sprouts at night is probably done by numerous suppliers given the step up in demand near Christmas.
Yet Lidl dress it as a nice story, as they have done with a number of provenance claims and stories about their work.
Fresh foods has been their strongest suit in terms of premium ranges for a couple of years now, whilst there is no Kevin Love (award winning chef who used to work for Lidl) this year. There remains a very strong range of fresh foods with more to come as we near the festive season.
Turkeys and wider Meat joints won't be arriving in store until the weekend, with the Christmas dessert based lines, Trifles and other shorter life lines starting to appear around now.
Lidl make room for the range within the core chilled assortment, taking out their permanent special buys bay and adding this range into that space.
Their festive parings, centred around matching up premium lines together is a good idea and executed well across the store.
Ambient is also strong; with a good range split between core and premium. Those barrels are in fact premium Coffee, not Rum.
There's just a generally good range here, and the affluent customers will appreciate alongside the hard pressed shoppers looking for a trade up treat for the festive period.
This is where discount do a great job, they do bring the premium foods to the masses in an affordable way. The ranges are generally very good and offer some new tastes and genuine innovation, rather than just a Pizza with slightly more toppings for example.
The one concern for Lidl is the feeling that standards have gone backwards in recent weeks. The core Lidl stores pre the push on premium and genuine improvement in their wider offer were very hard pressed in terms of staff on the shop floor.
With their romantic push into premium discount, the staff numbers have risen and this has clearly eaten into margins and profitability. It's clear for example that the customers cannot hope to have every element of their shopping trip satisfied.
Good quality products and low prices doesn't then mean Lidl can also run perfect stores with no queues. They're busy but generally very well presented. The images above would indicate a step down in focus as the store was trading well but didn't have all the checkouts open.
Perhaps Lidl with their focus on profitability (both good business but also they're expanding into the US which will require capital) are starting to review their labour spend in the UK?
Customers can't have it all. Lidl can afford to run things tighter to a point, but when it turns into out of stocks (like Wines) then it becomes a real challenge for customers.
There was a lot of crossing the road in the early days when discount came to the fore. Sizeable price gaps on staples meant you could save a huge amount at discount, now with the gap rapidly narrowing - even the discounters are finding it hard to grow profits and sales without adding cost.
When it's a 5p gap on a Cucumber, beware upsetting the customer too much... As Tesco et al are waiting with open arms with prices that are far, far lower than they once were....
Standards can perhaps slide a little, as customers are clearly happy with both prices and quality. However there is a danger that it's very difficult to then row back from their position of 'treating' the customer to everything...... Range, quality, service, standards and price.
The acid test is how far customers are willing to tolerate any step down in delivery in store.... One to watch in 2017 for sure..
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From the Grocery Insight newsletter archive, first sent to subscribers on 19 December 2016. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.